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Exploration Corporation is a solid efficient, profitable company thats currently
100% natural gas, with excellent existing gas production and very bright future drilling
prospects and high forecasted natural gas prices
Aspen Exploration Corporation
P.O. Box 22530
Bakersfield, CA 93390-2530
1601 New Stine Road - Suite 205
Bakersfield, CA 93309
Chief Executive Officer
Interview conducted by:
President and Chief Executive Officer
Mr. Cohan obtained a Bachelor of Science degree in Geology from the State University
College at Oneonta, NY in 1979. He has approximately 25 years experience in oil and
gas exploration, development, and evaluation including employment with Western
Geophysical, H. K. van Poollen & Assoc., Inc., Universal Oil & Gas, and Tri-Valley
Oil & Gas Co. Mr. Cohan has been employed by Aspen Exploration Corporation for a
total of 13 years and effective May 1, 2003, was appointed President and CEO of Aspen.
He is a member of the Society of Petroleum Engineers (SPE) and the American
Association of Petroleum Geologists (AAPG).
ASPEN EXPLORATION CORPORATION (OTC: BBASPN), operating primarily in northern
California is engaged in the business of acquiring and developing interests in domestic
oil and gas properties. The Company has a talented staff that allows Aspen to keep
overhead costs low and yet participate in numerous exploration and development drilling
deals as well as production purchases.
Aspen currently has working interests in approximately 59 producing wells (43 operated by
Aspen), mostly high BTU natural gas, and has a very active drilling program planned for
2004. In the past 3½ years Aspen has successfully completed 17 gas wells out of 20
attempts, which is an 85% success ratio, a record virtually unheard of in the oil and gas
exploration business. 3-D seismic data and qualified interpreters are essential for this
exploration. All of the selected drill sites for 2004 have been identified through the use
of 3-D seismic techniques, which have demonstrated great improvement in the percentages of
successful oil and gas discoveries. New and additional drilling locations for gas wells
are constantly sought, based on solid geology in conjunction with 3-D seismic information.
The Sacramento Valley of California, where current activities are focused, include
extensive, nationally important oil and gas production and refining facilities, thereby
allowing quick hook-up and production of gas when a discovery is made. The Aspen
staff and consultants have also found representatives of the State of California to be
very cooperative and it is not difficult to obtain permits for new exploratory wells or to
expand existing production.
CEOCFOinterviews: Mr. Cohan, please give us an overview on
Aspen Exploration Corporation?
Mr. Cohan: Aspen
was started in February of 1980, approximately 25 years ago. We are currently a 100%
natural gas producer in the Sacramento Valley of Northern California. I believe we now
operate 43 gas wells and have additional interests in 16 wells that other companies
CEOCFOinterviews: Tell us about your role as an operator.
Mr. Cohan: As an operator, we have control of all
aspects of the operations regarding the gas wells. We are in charge of identifying the
prospects, contracting out all the service companies, permitting, accounting, and
supervision of all phases of the process from start to finish. Aspen has working interest
participants that help share in the costs and the revenues of the wells. One of the big
strides Aspen has made over the past several years is that we are now able to take larger
working interests in the wells for our own account. When we started drilling in
California about 9 years ago and we didnt have much capital, we took very small
working interests in the wells. We have gradually built up our cash flow to the point
where we are currently participating for 20% to 30% working interest in the wells. Our
goal is that with increased production and cash flow, to take a greater interest in these
wells: 30% to 40% and possible someday own as much as a 50% working interest. Our group of
partners is comprised of very sophisticated investors who have been with us for quite some
time. We have shown them huge success; I believe weve drilled 17 gas wells out of 20
attempts over the last 3½ years. That is an 85% success rate, so we have no trouble
finding partners and as a matter of fact, I have a waiting list of people who would like
to get into some of our wells.
CEOCFOinterviews: What is your exploration strategy?
Mr. Cohan: Number one, we are very conservative and
patient; for every well that we drill, I review about 20 to 25 prospects. After I have
selected a prospect I have independent geological and geophysical consultants review the
ones that I like. If the consultants concur with my evaluation, we will drill the
prospect. We utilize a combination of 3-D seismic data and well control in evaluating
these prospects. So thats our strategy and the reason why our success rate has been
so high, we are very selective in what we drill and we try to use all of the exploration
tools available to us.
CEOCFOinterviews: What else separates you from the pack?
Mr. Cohan: We use only the top notch geologists and
geophysicists to help in the selection of our drillsites. I dont believe in luck, I
believe that you make your own luck, so we are patient and we dont just drill wells
because we can. Another factor that may come into play is we see a large deal flow, due to
Aspens great reputation, so many independent geologists and geophysicists send us
their plays. If we take their geologic plays they know that we are going to drill them in
a timely manner and therefore theyll get paid in a timely manner.
CEOCFOinterviews: What is your niche?
Mr. Cohan: For right now the Sacramento Valley; that is
a place where a lot of the majors have left, so it creates a lot of opportunities for some
of the smaller companies like Aspen. I think we have filled the void left by the exit of
the majors nicely and have been very successful. So I would say that natural gas up in the
Sacramento Valley is the niche that I think that weve filled.
CEOCFOinterviews: What are your criteria when looking for a
Mr. Cohan: Our wells range from the shallowest of 2,000
feet to the deepest of approximately 11,000 feet. I think what we need to see is a risk
reward ratio that makes sense; things like return on investment, average annual rate of
return, that sort of thing. We look for low to moderate risk type plays.
CEOCFOinterviews: Can you tell us about current happenings?
Mr. Cohan: One of our most exciting gas plays is called
the West Grimes prospect, located in Colusa County, California. Aspen has roughly 5,000
acres leased in this area. About a year and a half ago we shot a 10½ square mile 3-D
seismic survey over this acreage. We drilled our first 2 wells on the survey this year,
which are both successes. One of those is a very large well; gas sales should commence
from this well in a couple of days at 3,500 MCFPD of natural gas. We plan to drill 2 more
wells in the field this year. Further, we have identified approximately 11 additional
prospects in this field, which we will drill over the next few years. In other areas in
the Sacramento Valley, we took a farmout package of 6 wells from another independent
producer; we drilled the first 2 of those wells, which were successful gas discoveries and
are currently producing. We have 2 more wells in that package to drill this year and two
more next year.
CEOCFOinterviews: How do you differ from other companies in
Mr. Cohan: I would say that a lot of companies in our
position might see the production from their wells once a month and there could be a
problem arising, but by the time they see it, it could be too late. Each morning I get an
email from my various pumpers that gauge the wells everyday. It takes me five to ten
minutes to scan the production and if there is a problem with a well Ill talk to the
appropriate pumper about possible remedial measures we can implement. I really care about
the wells as if they are my children. I take a big interest in them, because its
kind of a creative process to drill each well. I think that you really have to love what
you do to care what your wells are doing everyday. I think thats a huge difference
and a huge benefit for Aspen and our partners in that we dont just drill the wells
and move on to the next one. We watch over every well every day so that production is
CEOCFOinterviews: What can you catch by being on top of
Mr. Cohan: You might be able to see that all of a
sudden a well is starting to make more water. If you continue to produce it at a higher
rate, more water could come in quickly and kill the well as opposed to if you catch it
before it becomes a problem. You can reduce the choke size and the flow rate a little bit
and possibly prolong the life of the well.
CEOCFOinterviews: What are the challenges going forward?
Mr. Cohan: I would say that continuing to find a large
number of quality prospects to drill which has not been a problem thus far. Funding has
not been an issue, as Aspens success rate has created a demand to participate in our
projects. Gas prices, which is something that I want to stress as we are a natural gas
producer, are extremely high. We are getting $6.00 per Mcf (one thousand cubic feet of
natural gas) for gas, which is very high price, therefore it makes it very profitable to
be a natural gas producer. So I would say that is our biggest challenge, to continue to
find quality drilling prospects.
CEOCFOinterviews: How do you deal with the cyclicality of the
Mr. Cohan: Every project we take has to be viable at
$2.50 gas; its hard to imagine $2.50 gas, but I could possibly see $3.50 or $4.00
gas, which is still a great price. So when we take a prospect, we pretty much know that
that prospect will make money at $2.50 per Mcf. If you take prospects that will only make
sense at $6.00 and then the price goes to $2.50, you are in trouble. I think we handle the
cyclicality of the business by taking projects that make sense with a much lower gas
price. I will say that most industry experts are predicting high gas prices for the
CEOCFOinterviews: Do you believe gas prices will be strong
Mr. Cohan: I believe gas prices will be strong in the
short, the medium and probably the long term. I think well see gas in the
$4.00 to $7.00 per Mcf range and thats really what matters most to Aspen and its
should people know about Aspen?
Mr. Cohan: Aspen is a solid, efficiently run, honest
company. I believe we have one of the best reputations for gas producers in the entire
Sacramento Valley of Northern California. We always do what we say we are going to do. We
will drill anywhere from 5 to 10 wells per year. All of our partners, vendors and
landowners are treated very fairly. We are patient and I think very knowledgeable. We have
an incredible success rate, 17 out of 20 is a great success rate, which is very rare. We
have also made a lot of money for ourselves and for our partners and I think that we are
just a good solid company with very little debt and very well run.
CEOCFOinterviews: What would you like to say to readers in
Mr. Cohan: We are a solid, efficient, profitable
company thats 100% natural gas, with excellent existing production and very bright
future drilling prospects and high forecasted natural gas prices. I would like to mention
that our website is www.aspenexploration.com and that we are traded on the OTC: BB, our
ticker symbol is ASPN.OB."
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